Surviving the recession: Lean thinking

During a recession, most organizations focus on reducing costs. Much of this focus is broadly based, looking at cutting costs, where the numbers are really big. In many cases, the approach is to cut staff, because fewer staff are needed to handle the volume of sales.

Many of these cost reductions cut to the bone. That is, they cut costs in areas which hurt them and make recovery of the business more difficult during a recovering economy.

All businesses waste their resources during peak times. The focus is on sales and growing and not on saving money. Work is done in the most "responsive" way to support customers, without proper planning. This waste builds up and a recession is an opportune time to focus on this waste.

In an article "Surviving the Recession: It's back to basics", the writer recommends the following:

• Develop a deeper understanding of your current and prospective customers (Don't cancel your CRM project!).
• Work to improve operational clarity (document your business processes and ensure all your staff have an end-to-end view!).
• As clarity improves, look at ways to reduce waste.
• As the economy recovers, look at your business strategy.

You will come out of the recession with an improved operation, better able to compete. The quoted article is based on Lean thinking.

Recession and Opportunity in Information Technology

A lot of talk is going on about the current state of the economy. Most people see it as a negative thing and assume that they will have difficulty maintaining sales, and will have to cut costs and reduce staff.

While this is a possibility, it is alaso an opportune time to improve your business operations. Improving business operations can reduce your costs, increase the quality of your products and services and and put you in a better position to maintain sales and be more ready to take on more business when the recession is over.

Let's look at the situation when things are going really well. We are so busy responding to customer needs that we do anything to deliver. This often means bypassing existing processes because they slow down deliveries. We also ignore excess inventory because we need more to satisfy customer needs. Over time these excesses cost us money and create excess overtime and waste.

As business slows down, your people have more time and while you can't afford to let them go yet, they have more time available. They are also more receptive to change, because the recession forces us all to think about it.

This is an excellent time to start to look at your business processes and how they can be improved. You have the time. You may also find ways to reduce costs. You may find ways to improve the quality of your products and services. All of these improvements may allow you to keep more customers because you have the ability to serve them better. A recesion provides a buyers market. Better capabilities means you are better positioned.

Another opportunity is your existing software. Usually when we buy software to run our business, we buy it for a particular reason. We get what we want from it (if we are lucky and do it well), then we move on. We seldom go back and look at the software to see if it can help us solve other problems.

Our business changes over time. As we grow, our needs change. These needs may be satisfied by software that we have already purchased. We don't have to evaluate new products, we don't have to install and learn new software, we just try the new function and see if it helps. That is like found money!

Nobody likes a recession. However, with every problem comes an opportunity. A recession provides an opportunity to improve your business so that you come out stronger and more competitive when it is over.